FAA Reauthorization Briefing Part 1: Airline Fee Issues

Aviation Alert

October 11, 2018

On October 5, 2018, President Trump signed into law the “FAA Reauthorization Act of 2018.” The Act, which has wide-ranging implications for the aviation industry, funds the FAA for the next five years. The legislation affects, among other issues, aviation-related consumer protection, labor law, airline fees, and disability accommodations in air travel. This briefing focuses on provisions in the Reauthorization Act that affect airline fees, including some that were omitted from the final legislation but will likely continue to be considered in the future.

Airline Ancillary Fee Refunds

What the law says: Within the next year, DOT must promulgate regulations requiring airlines to refund passengers any ancillary fees paid for services related to air travel that the passenger does not receive. This includes baggage fees as well as fees on a passenger’s scheduled flight, replacement itinerary, or a flight not taken by the passenger.

What the law means for airlines: The rulemaking must be initiated before October 2019. DOT, however, could use its enforcement authority to prohibit airlines from refusing to refund ancillary fees where a service was not provided to the passenger.

FAIR Fees Amendment

What happened: The proposed “Forbidding Airlines from Imposing Ridiculous Fees” (FAIR Fees) provision was not included in the final FAA Reauthorization Act. FAIR Fees, which was introduced by Senators Richard Blumenthal (D-Conn.), Edward Markey (D-Mass.), and Roger Wicker (R-Miss.), would have prohibited airlines from imposing fees that are “unreasonable or disproportional” to an airline’s costs and would have required DOT to establish standards to assess reasonableness and cost proportionality. The measure would have applied to all airline ancillary fees, including reservation change or cancellation fees, checked baggage fees, and seat selection/reservation fees. The language was included in the Senate-passed version of the act, but was eliminated in the final version.

Future considerations: The FAIR Fees provision was strongly supported by the three senators and other members of Congress, who may reintroduce some version of the legislation in the future.

Passenger Facility Charges (PFCs)

What happened: Despite lobbying from airport groups, the FAA Reauthorization Act did not increase the PFC cap, which remains at $4.50 per flight segment, as it has been since 2000. PFCs are not airline fees, but rather are FAA-approved charges that airlines are required to add to fares for itineraries involving specific U.S. airports that have been authorized to impose a PFC. Airlines collect PFCs and remit them to the airports. Airports use PFC fees to fund FAA-approved projects that enhance safety, security, or capacity, and have consistently lobbied for a PFC cap increase since 2000. While there was a proposal to increase the cap to $9.00 per segment, it was strongly opposed by airlines and ultimately was not included in the final version of the Act.